2 Top Quantum Computing Stocks to Buy in January

Quantum computing is one of the hottest tech trends right now, after artificial intelligence (AI), but investors should be cautious about jumping all-in on some quantum computing companies. That's because the technology is still in its early stages, and some pure-play quantum computing companies generate little to no revenue.

But that doesn't mean you can't get in early on quantum computing stocks; it's just best to focus on companies with longer track records than some speculative start-ups. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Microsoft (NASDAQ: MSFT) are making impressive moves in the quantum computing space and will likely benefit from the market in the years to come. Here's why.

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Alphabet's two big quantum computing accomplishments

Alphabet has been researching quantum computing for years, and in late 2024, the company made a major stride forward with its technology when it introduced Willow, a quantum computing processor that substantially reduced the errors quantum computers are prone to.

Willow is considered a significant leap forward, and Alphabet proved its tech prowess with the chip, showing that it could solve a complex mathematical problem in just five minutes that would take a traditional supercomputer 10 septillion years to complete.

That was impressive enough, but Alphabet followed it up with the release of a new quantum computing algorithm last year that ran 15,000 times faster than a traditional computing algorithm.

Alphabet is now working on its third milestone (of six), aiming to reach 1 million computational steps with less than one error -- a big leap forward from current quantum computers.

What's also important to point out is that Alphabet is generating plenty of cash to invest in quantum computing, with about $24.6 billion in free cash flow in the third quarter (which ended Sept. 30). Just as it did with artificial intelligence, Alphabet is playing the long game with quantum computing. If its current developments in the space are any indicator, it will likely pay off for the company and its shareholders.

Microsoft is rapidly moving forward with its quantum tech

Microsoft is a leading AI player right now, but it also has breakthrough technologies in quantum computing. The most notable is the company's Majorana 1 processor that Microsoft said "can create an entirely new state of matter" that's neither a solid, liquid, or gas. Microsoft calls it a topological superconductor or topconductor.

The benefit of Majorana 1 is that it can create stable and rapid qubits -- a unit of measurement for quantum computers -- that will allow Microsoft to eventually reach 1 million qubits on a single processor.

Microsoft also offers commercial quantum computers to customers through a partnership with Atom Computing and sells quantum computing services through its Azure Quantum cloud services. Given that Microsoft is the second-largest cloud player and nipping at Amazon's heels, quantum cloud services could be a boon for the company in the coming years.

Like Alphabet, Microsoft has plenty of cash to keep the quantum computing investments coming. The company had $25.6 billion in free cash flow in Q3 (which ended Sept. 30), giving the company plenty of resources to continue making big bets on this nascent technology.

Why buying these stocks is a smart move right now

Both Microsoft and Alphabet have established themselves as major players in quantum computing and have the capital to keep their efforts well funded for years to come.

Adding to their appeal is that both stocks look cheap right now. Microsoft and Alphabet's shares are just 33 times more than their trailing-12-month earnings, compared to the average price-to-earnings (P/E) ratio of nearly 45 for tech stocks.

With their relatively cheap price tags, substantial cash for new tech investments, and their current tech developments, Alphabet and Microsoft are in a great position to benefit from quantum computing in the coming years.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.